Edwin (E) was the father and a retired miner with savings. He transferred funds into bank accounts held jointly with his adult daughter (P). P had a spouse, M (who had disability). According to E's letters, he retained 100% ownership in the deposited funds and the deposits were not gifts. E controlled accounts. E died with a will. His will included specific bequests: most to P, some to M. The residue was to be divided equally between P and M.
Are bank accounts part of estate (residue)?
**How is the intention of the transferor determined?
**What is the general rule for gratuitous transfers?
A presumption of resulting trust is the general rule for gratuitous transfers. A presumption of advancement will apply only to gratuitous transfers from parents to minor children.
This case sets out the presumption of resulting trust (PoRT) as the general rule for gratuitous transfers. The onus is placed on the transferee to rebut the PoRT, on a balance of probabilities, to demonstrate that a gift was intended. This is consistent with the view that equity presumes bargains and not gifts (para 24). However, the Court noted that a presumption of advancement (PoA) will apply when a complete set of two criteria are met:
** First, the transfer must be from a father to a spouse or child, though the Court declared that the transferor may also be the mother (para 33, though subject to s.14 of the Family Law Act). While noting that a parent’s affection for their child is irrelevant (para 37), the Court indicated that parents have a legal obligation to provide for their dependent children (para 30).
** Second, the child must be a minor (para 40). The Court implied that minor children are also dependent on their parents, though not all dependent children are minors. Dependency alone is insufficient: allowing the application of the PoA to transfers to dependent adult children would lead to uncertainty, due to the wide variety of circumstances that make a person dependent (para 40). The Court also noted that an independent child no longer requires the financial support of his or her parents, thus nullifying a primary policy justification for the PoA; instead, an important consideration is the common practice among ageing parents to create joint accounts with their children so that their children can manage their parents’ financial affairs (para 36). In such a case, the child may be a trustee.
Therefore, the application of a PoA is limited to gratuitous transfers from parents to minor children. If the PoA applies, then the onus is placed on the plaintiff, rather than the transferee, to rebut the presumption of a gift.
In this case the requirements for a PoA were not met, and the Court imposed a PoRT. The daughter was an adult, not a minor. However, the daughter successfully rebutted the PoRT by demonstrating her dependence on financial support from her father, along with previous statements and actions by the father indicating his intention to gift the balance of the joint accounts through a right of survivorship. The Court noted that, in addition to statements and actions taken by the settlor, certain documents, while not conclusive, may play a role in rebutting a PoRT: e.g. banking documents, control and use of funds by the transferor before their death, power of attorney, etc.
Decision in favour of Pecore (P). Court found that P successfully rebutted the PoRT.